The case for a free market in IPv4 addresses

Microsoft's $7.5 million purchase of IPv4 addresses from a bankrupt Nortel …

As we run out of IPv4 address space, is it time to create an exchange for trading unused address blocks? Ars contributors Iljitsch van Beijnum and Timothy Lee tackle the issue. In this article, Tim explains why this is the way to go. You can read Iljitsch's take here.

Officially, the world ran out of IPv4 addresses earlier this year, when a final batch of addresses was divided among the five Regional Internet Registries. The authorities hope that declaring the IPv4 cupboards bare will push expanding networks into making the leap to IPv6, which has a 128-bit address space that's unlikely to ever be exhausted.

But the IPv6 transition is happening slowly, and expanding networks need more IPv4 addresses now. This need is especially acute in Asia, where rapidly growing economies and huge populations have created demand for tens of millions of new addresses each year.

Fortunately, the exhaustion of IPv4 addresses is greatly exaggerated. There are still a lot of unused and underused IP addresses in the hands of various private organizations. All that is needed is an incentive for them to part with their unused addresses voluntarily. In other words, what's needed is a market in IP addresses.

Three sizes fit all

In the early days of the Internet, blocks of IP addresses were available in only three sizes. There were "class A" blocks containing 16 million IP addresses, "class B" blocks containing 65 thousand addresses, and "class C" blocks containing 256 addresses. That meant an organization that needed 400 IP addresses often got tens of thousands of free IP addresses it didn't need.

And some organizations got even more. Ford, Merck, Xerox, Halliburton, and nearly a dozen other companies not primarily in the networking business were each given a Class A block of 16 million addresses. MIT also got a Class A block, and the UK government got two of them. The US government claimed about a dozen Class A blocks, giving it control of nearly 200 million addresses—more IP addresses than all of Latin America has today.

As people realized that the supply of addresses wouldn't last forever, a switch was made to a "classless" system that could allocate address blocks in any size that was a power of two. Under the new scheme, an organization needing 400 addresses would get a block of 512 addresses rather than 65 thousand.

But the Internet Assigned Numbers Authority, the organization that oversees the allocation of IP addresses, hasn't tried to reclaim the large blocks that were granted in the Internet's early years. Indeed, it's not clear it has the authority to do so. So Xerox, Ford, and MIT still have millions of addresses they almost certainly don't need.

IPs for sale

Obviously, Ford is unlikely to relinquish its IP addresses out of the goodness of its heart. Even if the company were confident that it would never need them and couldn't sell them, the renumbering process would be a headache. For example, the company would need to audit all of its firewalls to check for hard-coded addresses. But Ford probably would be willing to renumber its network and relinquish its unused addresses for the right price.

The obvious solution is for networks that need more IP addresses to buy them from organizations that have more than they need. Indeed, this process has already started. Earlier this year, Microsoft paid $7.5 million for two-thirds of a million IP addresses that were previously held by a bankrupt Nortel, suggesting that the going rate for an IP address is around $10.

A market in IP addresses will significantly extend the useful life of the IPv4 address space. Rising prices encourage firms to economize, and this principle applies to IP addresses as much as to any other scarce resource. So far, firms have been using IP addresses wastefully because they've been able to get new ones for free. Now that's no longer true, and firms will have to think harder about whether they're using their supply of IP addresses efficiently.

So what's the problem? The American Registry for Internet Numbers, the non-profit organization that has traditionally handed out IP addresses to North American ISPs, has resisted the emergence of a market for IP addresses—at least one it doesn't control. The organization insists that IP addresses are not property and that address blocks can only be transferred with its approval. ARIN's policy is to only approve transfers to organizations that ARIN believes "need" the IP addresses. ARIN president John Curran tells Ars that ARIN's policies were "developed by the Internet community."

The Nortel sale nominally occurred under the auspices of ARIN, but as Milton Mueller points out, ARIN seems to have signed on at the last minute as a face-saving measure. The parties to the transaction don't appear to have undergone the vetting process required by ARIN's specified transfer policy, and there's no evidence that ARIN conducted an assessment of whether Microsoft "needed" the addresses.

Indeed, the sale makes clear that, despite ARIN's protests to the contrary, IP address assignments are de facto property rights. ARIN's website states that ARIN "will not reclaim unutilized address space from legacy holders who sign this RSA, nor will ARIN attempt to take away legacy resources from organizations who choose not to sign it." In other words, legacy address holders (e.g. those who got IP address assignments under the pre-ICANN system) are entitled to keep their IP addresses for as long as they want. And the Nortel transaction suggests they're free to transfer them to whomever they choose, regardless of a needs assessment by ARIN. That sounds a lot like property rights.

In July, ARIN board member Paul Vixie penned an op-ed for ACM complaining about companies seeking to create private alternatives to ARIN's official whois database. The piece seems to have been a thinly veiled attack on the company that brokered the Nortel/Microsoft deal. Vixie is right that it would be bad to have multiple whois databases with conflicting information in them. But the solution isn't to give ARIN the power to block transactions it doesn't approve of. It's for ARIN to take on the more limited role of faithfully recording transactions that take place, regardless of who brokers them. In other words, ARIN should support a open market in IP addresses rather than trying to maintain control over the allocation of IP addresses.

The threat of fragmentation

Critics of IP address markets raise three major objections. First, they worry that IP address trading will lead to a fragmentation of the IP address space, cluttering up routing tables. If organizations can easily sell off unused IP addresses, they might be tempted to break up a single large address block into several smaller blocks and sell off the pieces they don't need. If that happened too often, it would strain the capacity of routers in the Internet's core.

This is a legitimate worry, and registries can play a valuable role in combatting this kind of unnecessary fragmentation of the address space. But if the problem is the fragmentation of the address space, then registries should focus on that problem. In particular, they should automatically approve any transfer of an intact IP block from one party to another, without inquiring about whether the recipient "needs" the addresses.

More to the point, if a liquid market for IP blocks existed, it would become much easier to match organizations to IP address blocks that met their needs. A growing organization should trade in its existing small block for a larger one rather than trying to hold several non-contiguous blocks. And an organization looking to downsize should trade in its large block for smaller ones rather than breaking up their existing blocks into smaller pieces. Bureaucratic restrictions on transferring IP address blocks make it harder to perform these kinds of mutually beneficial transactions.

Opponents also worry that the emergence of a market for IPv4 addresses would reduce the urgency of the IPv6 transition. That's probably true, but it's not a reason to oppose it. If people can get more mileage out of the existing IPv4 address space, registrars shouldn't stand in their way. People are still free to switch to IPv6 at any time.

Are IP address markets unfair?

Critics of selling IP addresses on the open market worry about the egalitarian implications of asking relatively poor countries like India to pay millions of dollars to rich countries like the United States for additional IP addresses. But this objection gets the issue precisely backwards. Obviously, it would be nice if Indian ISPs could take a time machine back to 1993 and ask Jon Postel to reserve a larger share of the millions of IP addresses he was doling out back then. But that ship has sailed. Nothing the IANA does now is going to get Indian ISPs millions of new IP addresses for free.

So the alternative to Indian ISPs paying Westerners for IP addresses isn't that they get them for free. It's that they don't get them at all. No one is arguing that Indian ISPs should be forced to buy IPv4 addresses. If they can go straight to IPv6, more power to them. But it would be paternalistic to try to block Indians from buying IPv4 addresses if they think that's in their interest.

A market for IPv4 addresses is coming with or without the assistance of the official registries. The economic forces are too strong to resist. If the registries embrace the trend now, they can build the infrastructure needed for an orderly transition to a market-based regime. On the other hand, if they fight the trend, it will simply push the transactions underground, rendering the official whois database useless. In the long run, it may also render the registries themselves irrelevant, as their functions are taken over by private firms that are willing to merely record transfers rather than trying to control them.

IPv6 might be a solution, but it also brings a truckload of problem. One being that many ISPs simply aren't ready to route it and therefore anyone willing to switch to IPv6 will also have to accept that many users will be unable to access their network without setting up a 6to4 tunnel.

IPv6 might be a solution, but it also brings a truckload of problem. One being that many ISPs simply aren't ready to route it and therefore anyone willing to switch to IPv6 will also have to accept that many users will be unable to access their network without setting up a 6to4 tunnel.

Sounds like catch-22 to me.

Then again, the conspiracy wank in me wonders if they stalled in the IP6 deliberately to have some kind of upsell "product" to provide once the crunch really happens.

Should the poorest countries in the world be forced to buy IP addresses from the West, providing a windfall to some of the richest American companies just because those participated in an e-landgrab at the right moment?

Then again, the conspiracy wank in me wonders if they stalled in the IP6 deliberately to have some kind of upsell "product" to provide once the crunch really happens.

It's the end users and the software they choose to use that causes most of the problems.

The second big issue is that there is a few holes in IPv6 specifications. Which is natural since you cannot predict 100% all the issues.. there is going to be things that people will have to figure out and work out as unexpected issues arise.

Quote:

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

Users still have, and will have always, the vast majority of the control.

Anyways if you want to join the 'IPv6 world' you don't have to depend on your ISP. Joining the IPv6 internet is relatively trivial as long as your home router supports it.

Services like SixXS or Hurricane Electric's Tunnel Broker program makes things relatively easy for people that have any understanding of networking. If you can't figure out how to get access to IPv6 internet and you consider yourself 'technically savvy'... you are lying to yourself about the 'savvy' part.

The nice thing IPv6 about that is:1. No port blocking. 2. You have control over reverse DNS if you want. 3. Hundreds of thousands of publicly addressable addresses under you control for next-to-nothing.

Going dual-mode with NAT'd IPv4 + IPv6 works out very well for anybody running modern OSes.

As far as ISPs go... when people move over to IPv6 it is going to be vastly cheaper then trying to do triple layer NAT'ng or other insanity that ISPs have to resort to nowadays.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

Indeed. Sometimes this smells like a manufactured crisis...

It's possible you've got cause and effect backwards. I'd argue that most ISP users don't "need" public IPs precisely because most ISPs decide that most users don't need them, so it's expensive to get a static IP.

If publicly-routable IPs were a dime a dozen (or, more accurately, $50 a 18,446,744,073,709,551,614 per month...so a dime a 36,893,488,147,419,000, monthly), my suspicion is that applications would gain widespread use which assumed the devices they run on are publicly routable.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

You're missing the point. If your ISP doesn't provide you with an IP address and do not route IPv6, you're stuck in IPv4 world. As a content provider (of any kind), if you decide to provide your content through an IPv6 address only, anyone in these "legacy" ISPs will be unable to access it.

Joining the IPv6 internet is relatively trivial as long as your home router supports it. .

But isn't that the really big problem here? Tens of millions (hundreds of millions?) of home and business routers, cable modems and DSL modems currently in use that don't support IPv6. And these items are still in production and still being sold in your local Best Buy or other similar shady electronics shop.

Eh, I think the only fair thing is ARIN reclaim some of the legacy chunks by fiat, declaring that current holders have 3 months to cease using excess A groups, and transfer those to major Asian Telecoms.

This is only taxes those who enjoyed too much for free before, and will encourage driving IPv6 transition by those with the clout to actually get it rolling.

You're missing the point. If your ISP doesn't provide you with an IP address and do not route IPv6, you're stuck in IPv4 world. As a content provider (of any kind), if you decide to provide your content through an IPv6 address only, anyone in these "legacy" ISPs will be unable to access it.

And no, you don't NAT IPv6.

All that you need is an IPv6 tunnel provider that can handle dynamic IPv4 addresses, and a router that can update the tunnel when the IPv4 address changes, just like the dynamic DNS services.

Other IPv4-only people can access your services through a proxy like sixxs.net. I wouldn't be very surprised if Google starts to offer a proxy service of its own, or even UDP to IPv6 tunnels implemented in Chrome.

I believe anyone arguing over whether IPv6 is a good idea is not really looking at how the Internet is growing on a world scale and also ignoring the fact that the train that is IPv6 has already started it's journey and it is only a matter of time before it gets to you.

As to the issue of home routers, then that is a real issue, but one that need not be one. Like the DTV transition, I believe governments should be mandating that all new IP aware hardware should have IPv6 capability or have a free upgrade solution to IPv6 from the manufacturer. Beyond feet dragging, there isn't much reason to get new hardware that only does IPv4.

I wrote my Congressmen (about a mandated change) and ISP about this maybe four years ago. My ISP said they had no need to do it (but serves IPv6 to their DOCSYS 3.0 customers, so that's a small win) and my Congressmen never wrote back.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

Indeed. Sometimes this smells like a manufactured crisis...

I would disagree. Many applications still rely on publicly routed addresses to function, or the ability to manipulate them via UPnP. Many games developed now also use a peer to peer connection model that breaks down due to NAT, and often only work because UPnP is normally available to manipulate the routers port forwarding. If you don't think gaming matters you are discounting a very large industry.

I for one am of the mindset that an ISP should be nothing more than a dumb pipe. By introducing large scale NAT they break functionality of existing protocols and force applications to become more dependent on centralized infrastructure going forward.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

Indeed. Sometimes this smells like a manufactured crisis...

I would disagree. Many applications still rely on publicly routed addresses to function, or the ability to manipulate them via UPnP. Many games developed now also use a peer to peer connection model that breaks down due to NAT, and often only work because UPnP is normally available to manipulate the routers port forwarding. If you don't think gaming matters you are discounting a very large industry.

I for one am of the mindset that an ISP should be nothing more than a dumb pipe. By introducing large scale NAT they break functionality of existing protocols and force applications to become more dependent on centralized infrastructure going forward.

Unfortunately ISPs have to look at every option. The divide created by two active IP protocols is one that needs to be bridged. One of those bridging technologies is carrier grade NAT. It's not pretty, but when Bob and Sue are on two different protocols and they can't talk natively, a translation technology is required. The IPv4 internet will be around even after new hosts are assigned only IPv6 addresses.

I foresee a little bit of both here. There will be an open market with some high profile sales as needy ISPs purchase addresses from organizations that have them but given the rate that addresses are needed this really doesn't buy much time, maybe a year of growth for those organizations. After all the addresses that can be used are transferred to those that need them most, and those that can pay, we'll be back at square one, it doesn't fix the fundamental problem that there is vastly more need of addresses than what exists.

I think that you'll see deployment of large carrier-grade NAT systems at ISPs for client systems but this will be expensive as NAT is harder than routing and uses more memory. This network design may also be slower and the extra levels of NAT will fundamentally break many contemporary applications such as VoIP and online games (no Xbox for you). Clients ultimately need to have traffic coming from a public address (somehow) and servers need to be reachable from a public address and those are hard limits.

Once the current IPv4 Internet really starts sucking because of these issues, a pressure that we in the West aren't so acutely feeling at the moment, then you'll see a mad dash to IPv6. It will be disruptive and require a lot of people to purchase new equipment or do firmware updates, but it will seem heaven-sent compared to the breakage that the IPv4 Internet will be suffering in a few years.

The registrars should serve as clearing houses. It makes a lot of sense for registrars and ARIN and the rest to play matchmaker between those with blocks of varying sizes on offer, and those who need blocks of those various sizes.

If ARIN or anyone else seeks to maintain control, this seems like a pretty good way to do it.

It would allow them to maintain the same kind of control they currently have, with respect to routing tables and whatnot. To a lesser degree, perhaps... since they have to work within the constraints of the current slide-puzzle... but at least it wouldn't be a total free-for-all.

I'd say the establishment of this kind of system is fairly urgent, actually.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

Indeed. Sometimes this smells like a manufactured crisis...

I would disagree. Many applications still rely on publicly routed addresses to function, or the ability to manipulate them via UPnP. Many games developed now also use a peer to peer connection model that breaks down due to NAT, and often only work because UPnP is normally available to manipulate the routers port forwarding. If you don't think gaming matters you are discounting a very large industry.

I for one am of the mindset that an ISP should be nothing more than a dumb pipe. By introducing large scale NAT they break functionality of existing protocols and force applications to become more dependent on centralized infrastructure going forward.

Unfortunately ISPs have to look at every option. The divide created by two active IP protocols is one that needs to be bridged. One of those bridging technologies is carrier grade NAT. It's not pretty, but when Bob and Sue are on two different protocols and they can't talk natively, a translation technology is required. The IPv4 internet will be around even after new hosts are assigned only IPv6 addresses.

Carrier-grade NAT is here to stay as part of the network landscape for the foreseeable future because there is a long tail of poorly maintained server hosts will never be upgraded to IPv6. I predict that we'll still be routing IPv4 until at least 2020 but probably 2030 although at a vastly reduced rate. NAT technology may switch from assigning RFC1918 IPv4 addresses to customers and doing carrier-grade NAT, which will suck immensely with all the breakages you describe, to going IPv6 only for customers and doing NAT64/DNS64 as the majority of the traffic flows to servers switch from IPv4 to IPv6 and IPv4 becomes less relevant. Of course IPv4 clients will be at a severe disadvantage because only full proxies could allow them to connect to IPv6 hosts at all.

With any luck carrier-grade NAT will be a one-time investment for ISPs as by the time the hardware needs to be refreshed it can be largely decommissioned except for a small core to handle the long tail of non-upgraders.

As to the issue of home routers, then that is a real issue, but one that need not be one. Like the DTV transition, I believe governments should be mandating that all new IP aware hardware should have IPv6 capability or have a free upgrade solution to IPv6 from the manufacturer. Beyond feet dragging, there isn't much reason to get new hardware that only does IPv4.

OK. So the government immediately passes a law requiring all IP-aware devices to support IPv6. Great.

But that still doesn't address the issue of a hundred million existing devices which are currently in use, do not support IPv6 and cannot simply be "upgraded". We're talking many billions of dollars here, and nobody is going to want to spend that money

Anyways if you want to join the 'IPv6 world' you don't have to depend on your ISP. Joining the IPv6 internet is relatively trivial as long as your home router supports it.

Services like SixXS or Hurricane Electric's Tunnel Broker program makes things relatively easy for people that have any understanding of networking. If you can't figure out how to get access to IPv6 internet and you consider yourself 'technically savvy'... you are lying to yourself about the 'savvy' part.

I know enough to have gotten DD-WRT running on my router, but I'm definitely not a networking guy. Are there any good links where I can read more details on setting up IPv6?

Sigh… The author demonstrates a disappointingly, if not tragically shallow understanding of both how IP addresses work, and how markets work -- and seemingly no understanding at all of how both are prone to stop working altogether, potentially without any overt warning, in the presence of widespread perverse incentives. A wide-open market for IPv4 addresses would be a veritable incubator for such incentives, because the same parties who will be the unilateral price-makers in all IPv4 market transactions will also, simultaneously, be collectively dictating the overall, "fully loaded" price (or price/value) for the only possible alternative to IPv4, i.e., IPv6 addresses. IPv4 address holders will determine the latter by exercising their absolute prerogative to choose the timing, extent, and technical particulars of their own IPv6 adoption efforts, which in turn will absolutely determine whether, when, and to what extent it will be possible for future Internet network operators to use IPv6 alone to add new resources and services to the Internet. The longer the current IPv4-based Internet remains overwhelmingly inaccessible to pure IPv6-based entrants, the higher the sale (or much more likely, lease) price of IPv4 is likely to climb -- and the longer IPv4 rents continue to rise and/or to remain stable at levels well above initial allocation prices, the less "economically rational" it would be for IPv4 holders to ever voluntarily give up that absolutely unassailable and eternal commercial advantage.

"If a liquid market for IP blocks existed, it would become much easier to match organizations to IP address blocks that met their needs." In the absence of any other qualifications, that statement should be regarded as exactly as true, and also exactly as meaningless and un-comforting, as the oft-repeated rallying cry of would-be "financial innovators" as to the certain benefits of maximizing the liquidity of capital markets. It sounds very reasonable in principle, at least for as long as you remain blissfully ignorant of exactly how little you and/or anyone else really knows about what goes on within the invisible, unknowable domain of intangible private swaps operating at the heart of (one of) these most central and critical of economic sectors. Could anyone have forgotten how this played out in the financial sector? Do we really want to run that same experiment again -- already? Sigh...

Joining the IPv6 internet is relatively trivial as long as your home router supports it. .

But isn't that the really big problem here? Tens of millions (hundreds of millions?) of home and business routers, cable modems and DSL modems currently in use that don't support IPv6. And these items are still in production and still being sold in your local Best Buy or other similar shady electronics shop.

I looked into upgrading my router to a IPv6 capable one. I found two- Apple's or a brand new NetGear.

IPv6 is a long way off, and in fact, I'd vote to scrap it and just extend IPv4 to IPv5, by adding two more octets, and leaving everything else the same.

... the same parties who will be the unilateral price-makers in all IPv4 market transactions will also, simultaneously, be collectively dictating the overall, "fully loaded" price (or price/value) for the only possible alternative to IPv4, i.e., IPv6 addresses. IPv4 address holders will determine the latter by exercising their absolute prerogative to choose the timing, extent, and technical particulars of their own IPv6 adoption efforts...

That may not be likely; consider that many of the companies holding unused IPv4 addresses are not ISPs and thus have no such conflict of interest.

Joining the IPv6 internet is relatively trivial as long as your home router supports it. .

But isn't that the really big problem here? Tens of millions (hundreds of millions?) of home and business routers, cable modems and DSL modems currently in use that don't support IPv6. And these items are still in production and still being sold in your local Best Buy or other similar shady electronics shop.

I looked into upgrading my router to a IPv6 capable one. I found two- Apple's or a brand new NetGear.

IPv6 is a long way off, and in fact, I'd vote to scrap it and just extend IPv4 to IPv5, by adding two more octets, and leaving everything else the same.

Wouldn't that just incur essentially all the pain of switching to IPv6, while yielding only a small fraction of the benefits?

Joining the IPv6 internet is relatively trivial as long as your home router supports it. .

But isn't that the really big problem here? Tens of millions (hundreds of millions?) of home and business routers, cable modems and DSL modems currently in use that don't support IPv6. And these items are still in production and still being sold in your local Best Buy or other similar shady electronics shop.

I looked into upgrading my router to a IPv6 capable one. I found two- Apple's or a brand new NetGear.

IPv6 is a long way off, and in fact, I'd vote to scrap it and just extend IPv4 to IPv5, by adding two more octets, and leaving everything else the same.

While every modern operating system and many routers support IPv6, I don't know any which support IPv5. It doesn't make any sense to switch to IPv5 when it has less support and a worse feature set than IPv6.

We just need to bite the bullet and move everyone to IPv6. Will it be painful and expensive? Yes, but messing around with all of this IPv4 address selling multi-level NATing will be more so in the long run.

Moreover, replacing the routers/modems of end users is not as a big a deal as you guys make it out to be. The vast majority of end users simply use whatever router/modem their ISP provides/rents/sells to them. There's no reason these same ISPs couldn't buy a bunch of IPv6 routers in bulk (low cost), replace the old routers, and charge the end users a premium to do so. In the best scenario, the ISPs may be able to keep using the same routers by simply updating their firmware to handle IPv6. The cable companies are already in the habit of replacing cable boxes and DVRs, so replacing routers/modems won't be a big deal.

The real work and cost is going to be replacing all of the high-end routing equipment at the ISPs, server farms, web hosts, and backbone.

... the same parties who will be the unilateral price-makers in all IPv4 market transactions will also, simultaneously, be collectively dictating the overall, "fully loaded" price (or price/value) for the only possible alternative to IPv4, i.e., IPv6 addresses. IPv4 address holders will determine the latter by exercising their absolute prerogative to choose the timing, extent, and technical particulars of their own IPv6 adoption efforts...

That may not be likely; consider that many of the companies holding unused IPv4 addresses are not ISPs and thus have no such conflict of interest.

Are you implicitly suggesting that (a) some/many of the non-ISPs that are now holding idle IPv4 are run by idiots, altruists, and/or true Internet idealists who would be willing to forego significant windfalls in order to incrementally reduce the odds/forestall the moment that the Internet becomes a closed cartel? Are you also tacitly implying that (b) most/all of the companies who purchase those addresses from (a) will also, inevitable, be describable in the exact same terms, and so on, and so on, ad infinitum? I ask because as soon as the resulting alphabet chain terminates, the only possible last stops for all of those those once-idled addresses is either a network operator, a protocol resource speculator, or a de facto digital land baron.*

*Note that scenarios in which the original IPv4 holder doles out addresses gradually, and only in small quantities, and exclusively to aspiring new entrants would be indistinguishable from broader "altruistic" or "exploitive" trajectories as described above, depending on the actual IPv4 price and terms demanded.

ISPs offering 3P are providing their clients with customized routers. Those can probably add IPv6 support with a firmware upgrade.

The backbone equipment mostly has support for IPv6 as well for some times.So does the server's basic software stack: OS, webserver, etc.

The real cost will be in adding IPv6 support to lots of things, from big webapps to small in house network management tools.And the dealing with the burden of managing an almost second network with new and unproven tools.

Sigh… The author demonstrates a disappointingly, if not tragically shallow understanding of both how IP addresses work, and how markets work -- and seemingly no understanding at all of how both are prone to stop working altogether, potentially without any overt warning, in the presence of widespread perverse incentives. A wide-open market for IPv4 addresses would be a veritable incubator for such incentives, because the same parties who will be the unilateral price-makers in all IPv4 market transactions will also, simultaneously, be collectively dictating the overall, "fully loaded" price (or price/value) for the only possible alternative to IPv4, i.e., IPv6 addresses. IPv4 address holders will determine the latter by exercising their absolute prerogative to choose the timing, extent, and technical particulars of their own IPv6 adoption efforts, which in turn will absolutely determine whether, when, and to what extent it will be possible for future Internet network operators to use IPv6 alone to add new resources and services to the Internet. The longer the current IPv4-based Internet remains overwhelmingly inaccessible to pure IPv6-based entrants, the higher the sale (or much more likely, lease) price of IPv4 is likely to climb -- and the longer IPv4 rents continue to rise and/or to remain stable at levels well above initial allocation prices, the less "economically rational" it would be for IPv4 holders to ever voluntarily give up that absolutely unassailable and eternal commercial advantage.

Great point! That also explains why OPEC is so successful at propping up the price of oil! Oh wait, they actually aren't. The factor you are missing is that while it may be rational for any individual IPv4 holder to maximize the value of IPv4 by constraining the supply of IPv6, it is ALSO rational for any individual IPv4 holder to exploit the high price of IPv4 addresses by undercutting with IPv6. It's your basic prisoner's dilemma. Defection is a strictly dominant strategy.

@apple4ever: I have no idea whether you were trolling or simply misunderstanding why your 'IPv5' suggestion of 'two more bits' is too late and worse than IPv6. I am going to treat it as the latter:

All IPv4 based solutions assume an address is 32-bits. There is no magic flag to address size and even if there was, no system has been designed to expect anything else.

With IPv6, it was accepted that since any expansion to the address space was going to break everything anyhow, we might as well add enough bits that we won't have to deal with this mess again for at least as many years as we can imagine.

The other point is that the IPv6 train has already been specified and has started it's slow acceleration. Stopping it now would be not make any more sense than stopping the year 2000 moving in.

Freewheeling IP block trading seems like a dangerous game. Not only will it increase routing table churn, in the worst case it could lead to a black market for IP blocks and a profit motive for deliberate duplication and splintering of the Internet address space; imagine if 66.225.202.0 routed to one network in the US but an entirely different (and unrelated) network in Russia?

Carrier grade NAT of IPv4 to work around address depletion comes with its own problems. Aside from massively breaking P2P apps (not a bad thing from the point of view of some organizations) it will make it quite a bit harder to prove a particular the user is behind a particular IP address (definitely a bad thing from the point of view of those same organizations). On the other hand, carrier NAT to bridge/tunnel IPv4 over IPv6 is almost certainly going to be necessary to manage an orderly transition.

Most ISP users don't need public IPs. I expect we'll see more and more NATing happening, especially since that will give the ISPs additional control over how users engage w/ the internet.

VoIP/Blizzard Games/EA Games/PS3/xBox360 and many other programs and devices will not work without a public IP address. You think they work behind a NAT because of uPNP transparently forwarding ports, but they will break behind a Carrier NAT.

There is also the fun fact that ISPs for broadband connections are by law obligated to log which IP addresses are assigned to which account at which times. If they use carrier grade NAT, they will suddenly need to log which Port+IP is attached to which account. You suddenly go from 1 log per account per week/month to 1+ logs per customer every second. Have fun with that bloat.

Timothy B. Lee / Timothy covers tech policy for Ars, with a particular focus on patent and copyright law, privacy, free speech, and open government. His writing has appeared in Slate, Reason, Wired, and the New York Times.